Nelson Peltz may be the nation’s most voluble investor–but he’s far from being its most valuable one. As the heated proxy fight between Disney CEO Bob Iger and Trian Partners’ Nelson Peltz reaches a fever pitch and Disney shareholders begin to cast their ballots ahead of the Disney annual meeting on Apr. 3, the question of Peltz’s own investment track record has become a contentious area of dispute. Some of the nation’s finest financial journalists have even fallen victim to his echo chamber of misleading mythmaking, missing his value-destructive impact.
In a recent TV appearance, one prominent media journalist declared, “However you feel about him, and whether he should be on the Disney Board or not, it is just not true…that Nelson Peltz has been destructive of value in companies where he’s been on the board. Trian’s released figures that show when Peltz or a Trian partner goes on the board to when they leave, the shares gain roughly 17% on average, and that is substantially higher than the S&P.”
Another journalist then responded, “One of the questions that’s been asked about the Nelson Peltz scorecard is when you’re measuring it. Are you measuring it just by when he’s on the board, in which case there is no question, the companies he’s been involved with have actually outperformed”.
However, contrary to the declarations of both experts, Trian has dramatically underperformed in recent years, whichever way you calculate it.
If we measure performance from when Peltz or a Trian partner joined the board to when they leave, the companies Trian has been involved with have actually underperformed the S&P by -6% annually, on average. As we were the first to reveal a year ago, with others such as Disney and The Wall Street Journal subsequently corroborating our analysis, across 22 total instances where Peltz or a Trian representative sat on a board, 15 of those instances, or roughly 70% of his board intrusion, resulted in those companies underperforming the S&P 500 during the entirety of Trian’s tenure.
These findings also align with statements from CEOs who have suffered with Peltz on their boards. According to a recent New York Times profile of Peltz, “Many said that the care and feeding of Mr. Peltz was time-consuming. After Mr. Peltz joined the board of the snack food maker Mondelez International, then-chief executive Irene Rosenfeld created a new executive position to handle some administrative duties while she dealt with Mr. Peltz….no one The Times interviewed could recall Mr. Peltz arriving on a board with bold ideas that no one else at the company had ever thought of”.
This does not even begin to consider how Peltz bullies some of the companies on whose board he sits into paying for his personal expenses; for example, forcing Wendy’s to reimburse him for ~$600,000 in “professional security services” each year.
And as we wrote earlier, even in the cases where his investments were successful, companies such as PepsiCo and P&G succeeded by largely doing the opposite of what Peltz advocated. At Pepsi, despite Peltz’s 2014 saber rattling, CEO Indra Nooyi wisely refused to divest North American and International beverages, heave off Frito Lay, or staple together Pepsi’s winners with Peltz’s losing hand at Mondelez.
At P&G, Peltz’s two main ideas–to move its Cincinnati headquarters “just for disruption” and to decentralize M&A to the business units–were wisely rejected.
This week’s chaos at the flailing packaged goods giant Unilever–with mass layoffs, brand dismemberment, and organization turmoil–has been laid at the feet of the activist investor, according to the new Peltz-endorsed CEO Hein Schumacher, who claimed the board member is “fully behind” a recently created strategy to revive the struggling maker of Dove soap and Ben & Jerry’s ice cream
Unilever’s stock has trailed the low bottom benchmark of the S&P 500 by 14% since Peltz joined the board. Unlike its consumer goods competitors, Unilever has also chosen to remain in Vladimir Putin’s Russia–quite the flip as it once led in brand quality and corporate social impact under former CEO Paul Polman.
Nor can Peltz claim to be a master of market timing: He famously predicted that GE’s stock price would double right before the stock proceeded to collapse 75%.
Trian is trying to change the goalposts–but an implosion is under way
Trian does not factually dispute that they underperformed the S&P 500 during the entirety of their board tenure in ~70% of the cases where Peltz or a Trian representative sat on the board, but they do complain that “We believe it is important to measure performance from the time of Trian’s involvement through Nelson Peltz’s board tenure and beyond,” not just the period between when Peltz joined and stepped off boards–ignoring the fact that when times were better for them, Trian themselves used to publicly tout the very methodology which they now imperiously dismiss. Indeed, Trian used to brag about how companies with Peltz on their board outperformed the S&P 500 during Peltz’s board tenure.
Regardless, even if we change the goalposts as Peltz now wants, Trian’s entire investment track record from the day they purchase to the day they sell their investments, regardless of board service, remains pitiful. Lauren Thomas and Cara Lombardo at The Wall Street Journal exclusively reported that from 2019 to 2023, Trian’s cumulative return in its flagship investment fund was 59%, compared to 87% for the S&P 500. On an annualized basis, Trian underperformed the S&P 500 by more than 4% annually over the last five years, with 9.7% annualized returns for Trian compared to 14% annualized returns for the S&P 500 over the same period.
Trian’s underperformance of the S&P 500 was not limited to just the last five years. In fact, Trian was terminated as an investment manager within Disney’s pension plan in 2021 after Trian had underperformed the S&P 500 by more than 5% on an annualized basis over eight years, dating back to 2013. Disney suggests this may have motivated Peltz’s revenge tour.
In response to the revelation of Trian’s overall underperformance against the S&P 500 over the last decade, Trian claims that since its inception in 2005, it has somehow outperformed the S&P 500–while refusing to release its comprehensive month-by-month or year-by-year performance data, or for that matter, any shred of evidence to support this astonishing claim.
Most activist investors transparently share their superior performance–and it’s hard to take Peltz’s improbable claims seriously when he regularly makes claims about his own performance which are later debunked, with a long track record of having to file regulatory corrections with the SEC when we called him out for overstating his performance previously.
Trian also points out that even in cases where their investments trail the S&P 500, they often have positive absolute returns–ignoring the fact that investors could often have generated superior returns from buying government bonds.
In recent years, there has been a stampede of U.S. and European investors exiting Peltz’s funds. Last year, he had to shutter his U.K. fund due to investor withdrawals. Meanwhile, major U.S. pension funds abandoning him led his total assets under management (AUM) to collapse 40% from $12.5 billion in 2015 to less than $8 billion today. No wonder the embattled activist investor had to rely upon Ike Perlmutter, his fellow octogenarian coconspirator in the anti-Iger vendetta, to fund almost 80% of the tantrum-driven war chest. Even Peltz’s top deputies are fleeing in droves, with former heir apparent and son-in-law Ed Garden no longer on speaking terms with Peltz after leaving the firm and acknowledging the business model is broken.
Peltz’s 25 desperate attempts to join Disney’s board should be seen as the last flicker of the flame of the flailing financier. This week, Disney’s largest shareholder, George Lucas, aptly commented about Peltz that entertainment is “not an amateur’s sport.” Indeed, as a brazen but hapless investor in consumer and industrial goods, the only background Peltz has in entertainment is his comically naïve, growling filibusters on TV.
Jeffrey Sonnenfeld is the Lester Crown Professor in Management Practice and Senior Associate Dean at Yale School of Management. In 2023, he was named “Management Professor of the Year” by Poets & Quants magazine.
Steven Tian is the director of research at the Yale Chief Executive Leadership Institute and a former quantitative investment analyst with the Rockefeller Family Office.
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